Bulls Eye

Final Customers
I I M B A N G A L O R
E

Local Shareholders Trade

Associations
Communities

UNTAPPED
OPPORTUNITY:

Distributors
Investors
NGOs Suppliers &
LuxCo. Manufacturers
Exploring local
demand growth
for LuxCo
Schools & Employees Media &
Influencers
Universities

Regulatory Bodies
 Evolution of the Personal Goods Luxury Industry
Tracing o ppo rt uni t i es in the i ndust ry to capture value along with new drivers of growt h

Circular Younger Emerging

Economy Customers economies
Market Growth

Evolutionary
 Bio degradable materials  New age ‘Funky’ designs  Shifting demand paradigm
Change

 Ethical sourcing practice  Co-creation demands  Emerging aspirational class

 Repurchase: Repurpose Fabric  More socially conscious  Access range dilemma

 Decreased carbon footprint  ‘Stick to your roots’ mentality  Heritage vs Culture

Time duration

Digital Evolving Local demand

channel Technology Focus
Market Growth

COVID driven  E-commerce sales channels  Predictive demand analysis  Lack of travel, shift to virtual
change
 Mono & Multi-brand platforms  AR-VR customer experience  De-globalization: centripetal

 Big Data & Targeted ads  AI-ML for supply chain  Diversity & heritage capture

 Optimize last-mile logistics  Gaming & NFT industries  Stakeholder collaborations

Time duration

Source: Team analysis; ForbesLife 2021, How Luxury Brands Plan To Reconnect With Local Consumers In Post-Covid 2021
 The Local Demand Opportunity
Exploring the local demand opportuni ty to effect ivel y use & build capabi l i t i e s, capi t al i zi n g on new market di rect ion

300
billion euros

250 2020: Share of local purchases

200 reached 80-85%, 15-20%
Market value in

150  Driven by curbs on international 30-35%

100 50 travel
 Drastic fall in the total # of intl. 80-85% 65-70%
tourists
2025 (E): Share of local purchases
expected to stabilize around 65-70%,
 Driven by domestic relevance in China &
LuxCo revenue in

5,242 5,401 2020 2025 (E)

million euros

4,978
3,668 the broader Asian region
3,018 2,751 2019
 Locals expected to shift to online channels Local Demand Tourist Demand
2,224
1,703
2020

The Nuance of Local demand: (Opportunities & Challenges)

Europe US APAC Others

Connect with regional culture & Emerging preference towards

heritage affordable ‘access ranges’
3 Levers to sense &
seize the local demand
Scope for customization to Greater emphasis on local
opportunity establish real connect community &
sourcing
This strategic choice today
Resource will shape the firm’s future Language & style variances to Require newer ways of
tap diverse customer segments messaging, less brand loyalty

Source: Team analysis; Bain. (2020). The Future of Luxury: Bouncing back from Covid-19
 Local Influence in Design & Procurement
St art ing at the top of the value chain to nuance ideol ogy & operat i ons in l ine with em erging needs

Recommendations Rationale Cost/Benefit Analysis

Implementation Costs associated

Inclusion
Co-creation is a rising trend among new gen Procurement Cost Rising inefficiencies
Sourcing of local ethnic fabric and prints,
Complexity in Loss of Global
handcrafted design from SMEs Supply Chain Economies of Scale
Sustainability focus
Local themed designs, popular millennials & Gen Z focus on sustainability R&D, Design Legal & Regulatory
icons/symbology in designing Increased cost of Regulatory & Legal
Diverse preferences of locals personnel & skillsets barriers arising in
APAC
Product development focused on the standard design vs local markets is a huge
youngsters and boomers separately challenge Benefits Derived
 Growth in Brand visibility among new gen
Cocreation of limited-edition designs with APAC is major market for LuxCo
 More power through close supplier network
community involvement, Focus on emerging local markets
 Respect in local community resulting
Operational Steps Genrational Shift in Consumers in
APAC: 120 higher sales
 Strengthening supplier community in local area 100  Possible Regulatory / Tax benefits in host
 Financial and regulatory support 80
countries
60
KPIs to Track
Overall: 40
 Two major collections of the year each focusing 20  Design acceptance rate
boomers and youngsters 0  Collection Inventory turnover
 Digital designing competition to initiate co- 2018  # Customers lost due to stock-outs
creation 2025*  Delivery reliability
Baby Boomers and Silvers Gen X  Employee safety & satisfaction
Millennials Gen Z  Customer repurchase rate
Source: Team analysis; Bain. (2020). https://luxe.digital/business/digital-luxury-trends/luxury-future-trends/
 Exploring Digital Channels
Leveraging new age t ech no l og i cal cap abi l i t i es to s ucces s fu l l y connect with local consumers

Recommendations Rationale Cost Benefit Analysis

E-Commerce platforms Based on Case study (Piaget in China)

Online Luxury Sales ($)
37% 30%
Insights from the case:
CAGR
Localized digital advertising
 Customers spend 6 hrs / day on Phone
70.1
Expected  55% of Luxury Shoppers ended up buying
55.4 share of
Custom social media campaign recommended products
37.3 Online in total  9x increase in total community observed
sales by 2025
2019 2020 2021
Immersive store experience - Assumptions:
VR
Brand interest on Google*
 Initial community size taken as 100
Measurement Metrics 100 Peers closing gap on Gucci  Increase due to online presence taken
80 9x
 Customer engagement: Audience,  Visibility index taken to be 25%
60  Conversion rate taken 55%
Share of Voice
40
20 Item In € (monthly)
 SEO-SEM: Search rankings, # of industry keywords,
Cost per Click 0 Incremental revenue (€) 956

 Traffic analysis: Inorganic vs Organic split, Paid Cost of advertisement

218
advertisement tracking, Monthly active users program (€)
Gucci Louis Vuitton Hermes
Net monthly benefit (€) 738
 Website performance: Load time, pages per visit, Loreal Chanel
Bounce rate (%)
Note: *Digital Brand Interest data pertaining to global traffic on Google
 Google
Source: Customer reviews: 2021,
trends; FashionAgency Yelp5 ratings, Consumer
Reasons Your forums
Luxury Brand Must Be on Tmall Luxury Pavilion; Team Analysis
 Adaptive & Localized Collaborations to Deliver Impact
Adapt ing the local culture and f renzy in co l l ab orat i on s & marketi ng strategy to drive brand recall & connect

Recommendations Rationale Cost Benefit Analysis

 Advent of social media has shifted the Cost (Annual) in Metric

Onboard local icons as brand € Mn impacted
ambassadors power in favor of consumers
Brand ambassador 5 Search index
 Luxury no longer a one-way street -
Associate LuxCo brands with local monolithic approach not likely to work Design competitions 0.04 * 25 Design Insights
relished artifacts – Tap cultural pride
 Customer understanding, engagement & Sponsorship of events &
artifact displays (0.5 – 0.6) * 2 Brand identity
Use of Micro-influencers & social media – feedback paramount
Engage and activate Gen-Z
 Micro-influencers ~2 – 3 Capture Gen-Z
Need for Cultural marketing to connect with
customers Virtual fashion shows ~0 Retention
Portable points of outreach & sale
(Kiosks) Access &
Portable kiosks 0.03 * 5 * 25
Visibility
Live stream collection reveals & Increasing engagement of locals
fashion shows globally – Enhances with
customer’s intimacy to the brand  Establish brand identity in the local context
community groups & local bodies
 Capture the growing Gen-Z market (~70% of
Actively seek & incorporate feedback –
+ve synergies from 2025E demand from Gen Y & Gen Z)
Conduct events like design competitions
complementary
business activities emerging  Enhanced accessibility, visibility and reach
Decentralize autonomy & employ  2-way exchange through feedback incorporation to
local expertise - Identify best routes for
communicating brand identity Proven success stories in emerging propel popularity
markets like China
Source: Team analysis; ForbesLife 2021, How Luxury Brands Plan To Reconnect With Local Consumers In Post-Covid 2021, DaxueConsulting, Gucci Strategy in China
 Unit Costi ng & Financial Impact
Est i mat ed impact on unit econom ics and f i nanci al s upon i m p l em ent at i on of s uggest ed reco mm en dat i ons

Unit Costing of
Design & Sourcing Digital sales channels Strategic collaborations
a luxury bag

Retail 100% Increase in material cost 40% Increase in marketing cost 7-8% Increase in marketing cost 5-7%
Price
Increase in labour cost 50% Increase in admin cost 2-3% Increase in admin cost 2-3%
Mark-up / 93.75%
Profit Increase in personnel cost 10%
Reduction in Transport & 20%
Cost of 6.25% Logistics Increase in engagement 50%
goods
Reduction in Import price 40% Increase in engagement 450%
Cost headers (as a % of goods cost) Increase in #Sales 10%
Increase in #Sales 20%
Material 24.0% Sustainability & Value
cost increase #sales
6-10%

Transport &
Logistics
22.5% Overall Benefit Overall Benefit Overall Benefit
Obtained 1.11X 1.15X Obtained ~7-8% 1.08X
Obtained
Labour & ~11% ~12%
Personnel
9.3% • Overall markup will X • Decrease in X • Decrease in X
increase by ~2-3% markup by 4-5% markup by ~1-2%
Marketing &
32.0%
• Sales will go up • Huge increase in • Increase in #sales
Promotion sales by 20% as a by about 10%
by 6-10%
share of all sales
General & channel
Administrative
12.2%

Source: Team analysis; CBS News, What would a luxury handbag cost without the markup?; https://economictimes.indiatimes.com/industry/cons-products/fashion-/-cosmetics-/-jewellery/brands-sourcing-locally-to-become-more-competitive/articleshow/6647473.cms
 Sustainability Focus across The Value Chain
Cont i nued focus on sust ainabl e value creati on, to stay relevant to emergi ng cus tomer priori ti es

5
Communicating our mission to the last mile
-Transparent reporting of green initiatives in the host country, socially and ecologically
- Enhancing legitimacy of resale market by investment in blockchain for authenticity

4
Energy efficient stores & office spaces
- Design of stores in line with our mission, leverage green buildings, solar power and IOT
- Enhanced focus on e-commerce and VR technology to reduce stores footprint

3
Optimize supply chains: tech efficiency
- Create local agile supply, initiatives to include EVs to reduce carbon footprint
- AI/ML predictive models for demand estimation and operation optimization

2
Empowering designs focused around relevant issues
- Use the power of design to communicate burning local issues Support &
- Elevation of local community artisans by partnership and local sourcing
Channels Reporting
1 Sustainability
Use of sustainable methods Circular economy: Repurchases
Distribution
- Leverage the rising Re-sale market. Repurchase older luxury products from logistics
consumers and reuse the material for as sustainable future
Design &
Production
Raw material
Sourcing
Source: Team analysis; LuxCo Sustainability report; LuxCo Annual Report
 Integrated Customer Strategy
Leveraging new age t echn ol o gi cal capab i l i t i e s to s u ccess fu l l y connect with local consumers

 Co-creation & design development targeted at Gen Z,Y customers

 Portable Kiosks & PoS – set up in high end events, art galleries, etc.

 Associate LuxCo brand with local culture - regional ICONS & artifacts

 Digital store experience – AR/VR tools to recreate the luxury experience virtually

 Social media activity & events to keep customers hooked to the brands
Acquisition
 Competitions & events to engage customers in designing & feedback

Engagement  Live streaming of new collection reveals in strategic locations

 Repurchase products from customers to use material for further production

 Continuous product innovation by incorporating feedback

Retention

 Engage with local community – talk about relevant regional issues publicly
Referral  Commitment to sustainability – use tech to reduce carbon footprint

 Source materials locally to generate business & good publicity in the region
Revenue
Source: Team analysis;